Management at Super Micro Computer (SMCI 2.22%) gave investors a much-anticipated business update last week that did not appease investor concerns. And the company faces yet another major hurdle this week.
Concerns about an upcoming deadline as well as fears of lost business opportunities have the stock sliding today. As of 10:40 a.m. ET, Supermicro shares were starting off the week down by 11.1%. That brings the monthly drop in the stock to about 53%.
NASDAQ: SMCI
Key Data Points
Delisting deadline looms
Supermicro provides server stacks and cooling systems for data center computers. Its business had been ramping up quickly with surging revenue as demand for artificial intelligence (AI) computing accelerated data center growth. But after a short-seller report and the company delaying the release of its 10-K annual report, investors had to question the legitimacy of the company's prior financial results.
Last week Supermicro provided an update saying sales would be slightly lower than prior guidance. It also said an investigation by a special committee found "there is no evidence of fraud or misconduct on the part of management or the Board of Directors."
While that sidesteps a worst-case scenario, the company has yet to file its annual report for its fiscal year ended June 30. It now faces a Nov. 16 deadline to offer a plan to the Nasdaq Stock Exchange to regain compliance according to stock listing rules. A delisting from the major exchange would very likely lead to more selling of Supermicro stock.
Investors are getting ahead of that potential drop by selling shares today, it seems. The move shouldn't be looked at as a buying opportunity either. Reports have also said the company is losing business due to the instability of the situation. Supermicro is best watched from the sidelines unless or until the company shows in its annual report that its business is stable and its financial data is accurate.
